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12 Cards in this Set
- Front
- Back
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Distinguish between temporary investments and long-term investments.
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Temporary investments are readily marketable and are held less then a year
Long-term investments not readily marketable and are held over 1 year |
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When securities of a long-term investment nature are acquired by donation, at what amount are such assets initially recorded in the hospital's accounts?
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Recorded in the appropriate fund at their fair market value
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When securities are purchased for long-term investment purposes by the hospital, what is their "cost"?
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Cost of bonds and stocks purchased will include, purchase price, brokerage fees, and other expenditures.
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In what fund should the hospital record income earned on long-term investments? In what fund should gains and losses on sales of long-term investments be recorded?
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Long-term investments should be recorded as non-operating revenues of the unrestricted fund
Gains or losses on long-term investments should be recorded in the fund which investments were carried as assets |
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Explain what is meant by the declaration date, the record date, and the payment date with respect to corporate dividend distributions resulting from hospital investments in corporate stocks.
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Declaration date: Directors voted dividend payment approval
Record date: Names the stockholders entitled Payment date: When dividend checks will be mailed |
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What are some of the major features of a satisfactory system of internal control over hospital investments in securities?
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Purchases should be authorized, certificates should be kept in a safe place, regular reports of investment activity should be made.
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Sara hospital holds an investment in capital stock of an industrial corporation. The hospital receives 50 shares of the corporation's common stock as a dividend at a time when the stock is quoted on the market at $40 per share. Should Sara Hospital record $2000 of dividend income?
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No; no formal entry is needed because stock dividends do not give rise to income
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Saint Hospital owns investment securities that cost $100,000 but have a current market value of $140,000. At what amount should these securities be presented in the hospital's balance sheet?
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Valued under the cost princible
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A hospital owns 300 shares of stock that were acquired as follows:
1/1/X1 100 shares for $4000 1/1/X2 100 shares for $5000 1/1/X3 100 shares for $6000 On 2/1/X3 150 of these shares are sold for $9750, what is the gain? |
If FIFO, gain is $3,250
If LIFO, gain is $1,250 If average cost, gain is $2250 |
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When corporate bonds are purchased between interest payment dates, the hospital purchaser must pay accrued interest since the last interest payment date. Why?
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Bonds issuer will always pay a full 6 months' interest on each interest payment date regardless of number of months bonds have been held by investors
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When corporate bonds are purchased at a price higher or lower than face value, the premium or discount must be amortized by the purchaser. What is the purpose of amortizing bond premium or discount?
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If not amoritized the premium or discount would need to be recognized at time of purchase which would misrepresent the effect
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In what sections of the hospital balance sheet does one find the following accounts?
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Temporary Investments?
Current Assets Long-term Investments? Non-Current Assets Accrued interest receivable? Current Assets Long-term investments-stocks? Non-Current Assets Dividends receivable? Current Assets |
